Kentucky Supreme Court Limits Employers’ Ability to Enter Arbitration Agreements with Employees

By Marianna Michael

Within the first week of October, the Kentucky Supreme Court issued its opinion in Northern Kentucky Area Development District v. Snyder NO. 2015-CA-001167 (Ky. Aug. 27, 2018). The court faced the decision of whether the Federal Arbitration Act (“FAA”) preempted KRS 336.700. Ultimately, the court held that: (1) employers may not condition employment on entering into arbitration agreements and (2) the FAA does not preempt KRS 366.700(2).

In this case, Danielle Snyder brought suit against her former employer, the Northern Kentucky Area Development District (“NKADD”). NKADD is a public agency that provides social programs to eight Kentucky counties. It hired Snyder on the condition that she enter into an arbitration agreement. The agreement required Snyder to resolve all disputes with NKADD through arbitration and not through the courts. Snyder was given the option to reject the agreement within five days of accepting it, but the rejection would end her employment with the company. She accepted the condition and worked for NKADD until